The plane builders, suppliers, and airlines are all faring better, and the future looks optimistic, given the rise in world income levels and the global economic recovery.

In July, international passenger traffic jumped 5.1% year-over-year, according to the International Air Transport Association. (Source: “Solid Demand Growth Continues in July – Asia Weakens as Europe Gains Strength,” International Air Transport Association web site, September 3, 2013, last accessed September 10, 2013.)

The report noted that the top domestic growth was found in China (+10.7% in July) and Russia (+11.7%). Other key areas for growth included India (+6.0%) and Japan (+5.7%). Meanwhile, travel in the U.S. domestic travel market was comparatively muted at 1.5%.

In China, the increase in domestic travel will translate into higher demand for lodging, which I feel will continue to be a growth area in the Chinese market. In addition, the country has become one of the top travel destinations in the world for both business and personal travel.

And this means rising demand for accommodations from the value hotels to the luxury. Having stayed at a popular Chinese hotel chain when I was in China, I can say the quality of the accommodations was first rate. Yet with over 1.3 billion people and an increase in domestic travel as local incomes rise, I see a need for more motels and hotels to be built.

A domestic value-oriented Chinese hotel chain operating in that country is Shanghai, China-based China Lodging Group, Limited (NASDAQ/HTHT). The shares of China Lodging trade as American depositary shares (ADS).

The chart shows the stock currently in a tight sideways channel and a bullish “Golden Cross” with the 50-day moving average (MA) above the 200-day MA, based on my technical analysis. We could see a breakout on the horizon, but be careful, as the stock could also falter down to the $18.00 level.

Chart courtesy of www.StockCharts.com

The hotel first welcomed patrons in 2005 and aims to deliver high-quality, conveniently located, and reasonably priced hotels from economy to mid-scale. Its brands include Seasons and Starway in the mid-scale pricing area and HanTing Express and Hi Inn in the economy segment.

As of June 30, 2013, China Lodging operated 1,216 hotels and 132,557 rooms across 213 cities in China, which was significantly higher than the previous June’s 863 hotels in 131 cities.

China Lodging has a high occupancy rate (excluding franchised Starway hotels) of 91.3% in the second quarter.

A major portion of its business is originated from its HanTing Club membership with over 11 million members, which accounted for about 80% of the rooms in the second quarter, according to China Lodging.

The growth has been consistent. China Lodging reported five straight years of revenue growth, from $37.31 million in 2007 to $517.56 million in 2012 and the growth is expected to continue this year at 28.3% followed by 21.7% in 2014, according to Thomson Financial.